Exhibit 10.12
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
THIS CHANGE OF CONTROL EMPLOYMENT AGREEMENT (the
"Agreement") entered into between XXXXXXX COMPANIES, INC., an
Oklahoma corporation (the "Company"), and __________________, an
individual (the "Executive"), dated as of the ____ day of
_______, 1999.
The Board of Directors of the Company (the "Board"),
has determined that it is in the best interests of the Company
and its shareholders to assure that the Company will have the
continued dedication of the Executive, notwithstanding the
possibility, threat, or occurrence of a "Change of Control" (as
defined in Section 2 of this Agreement) of the Company. The
Board believes it is important to diminish the inevitable
distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control, and to encourage the Executive's full attention and
dedication to the affairs of the Company during the term of this
Agreement and upon the occurrence of such event. The Board also
believes the Company is best served by providing the Executive
with compensation arrangements upon a Change of Control which
provide the Executive with individual financial security and
which are competitive with those of other corporations. In order
to accomplish these objectives, the Board has caused the Company
to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "Effective Date" shall be the first date
during the "Change of Control Period" (as defined in Section 1(b)
of this Agreement) on which a Change of Control (as defined
below) occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company
is terminated prior to the date on which a Change of Control
occurs, and it is reasonably demonstrated that such termination
(i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of
Control, then for all purposes of this Agreement the "Effective
Date" shall mean the date immediately prior to the date of such
termination.
(b) Subject to the provisions of Section 11 of
this Agreement, the "Change of Control Period" is the period
commencing on the date hereof and ending on the earlier to occur
of (i) the third anniversary of such date or (ii) the first day
of the month next following the Executive's attainment of age 65
("Normal Retirement Date"); provided, however, that commencing on
the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary
thereof is hereinafter referred to as the "Renewal Date"), the
Change of Control Period shall be automatically extended so as to
terminate on the earlier of (i) three years from such Renewal
Date or (ii) the first day of the month coinciding with or next
following the Executive's Normal Retirement Date, unless at least
60 days prior to the Renewal Date, the Company shall give notice
that the Change of Control Period shall not be so extended in
which event this Agreement shall continue for the remainder of
its then current term and terminate as provided herein.
2. Change of Control. For the purpose of this
Agreement, a "Change of Control" shall mean:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more (the
"Triggering Percentage") of either (i) the then outstanding
shares of common stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, in the event the
"Incumbent Board" (as such term is hereinafter defined) pursuant
to authority granted in any rights agreement to which the Company
is a party (the "Rights Agreement") lowers the acquisition
threshold percentages set forth in such Rights Agreement, the
Triggering Percentage shall be automatically reduced to equal the
threshold percentages set pursuant to authority granted to the
board in the Rights Agreement; and provided, further, however,
that the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (iv) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (x), (y), and (z) of subsection (iii) of
this Section 2; or
(ii) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, appointment or nomination for election by
the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for purposes of this
definition, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) Approval by the shareholders of the Company of a
reorganization, share exchange, merger or consolidation or
acquisition of assets of another corporation (a "Business
Combination"), in each case, unless, following such Business
Combination, (x) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination will
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which
as a result of such transaction will own the Company through one
or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination
of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (y) no Person (excluding
any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) will
beneficially own, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership
existed prior to the Business Combination, and (z) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination will have
been members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of (x)
a complete liquidation or dissolution of the Company or, (y) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, (A) more than
50% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors will be beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B)
less than 20% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors will be
beneficially owned, directly or indirectly, by any Person
(excluding any employee benefit plan (or related trust) of the
Company or such corporation), except to the extent that such
Person owned 20% or more of the Outstanding Company Common Stock
or Outstanding Company Voting Securities prior to the sale or
disposition, and (C) at least a majority of the members of the
board of directors of such corporation will have been members of
the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such sale
or other disposition of assets of the Company.
3. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company, for the period
commencing on the Effective Date and ending on the earlier to
occur of (a) the third anniversary of such date or (b) the first
day of the month coinciding with or next following the
Executive's Normal Retirement Date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the
Executive's position (including status, offices, secretarial and
administrative support, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the 90-
day period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date
or any office or location less than 25 miles from such location.
(ii) During the Employment Period, and
excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business
and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During
the Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an associate of the Company in accordance
with this Agreement. It is expressly understood and agreed that
to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary ("Base
Salary") at least equal to the greater of (i) his annual base
salary in effect immediately prior to the Effective Date or (ii)
the highest average annual base salary paid or payable to the
Executive by the Company and its subsidiaries during the five
fiscal years immediately preceding the fiscal year in which the
Effective Date occurs; provided, however, that the three (which
need not be consecutive) highest annual base salaries paid or
payable during the past five fiscal years which yield the highest
annual base salary payable shall be utilized to compute the
highest average annual base salary. Such Base Salary shall be
payable monthly in cash. Base Salary shall be computed prior to
any reductions for (i) any deferrals of compensation made
pursuant to Sections 125 or 401(c) of the Code and (ii) any
withholding, income or employment taxes. During the Employment
Period, the Base Salary shall be reviewed at least annually and
shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary awarded in
the ordinary course of business to other key management
associates of the Company and its subsidiaries. Any increase in
Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Base Salary
shall not be reduced after any such increase.
(ii) Annual Bonus. In addition to Base
Salary, the Executive shall be paid, for each fiscal year during
the Employment Period, an annual bonus in cash at least equal to
the greater of (x) the middle target level bonus payable,
regardless of whether any specified targets are met, under the
Company's incentive compensation plan applicable to the Executive
for the Executive's position, on the Effective Date (provided,
however, if no middle target level has been set as of the
Effective Date, the middle target level set for the fiscal year
immediately preceding the Effective date shall be utilized, and
(y) the maximum aggregate bonus paid (under the Company's
incentive compensation plan applicable to the Executive or
otherwise) during any of the five fiscal years immediately
preceding the fiscal year in which the Effective Date occurs.
The greater of the amounts described in clauses (x) and (y) of
this Section 4(b)(ii) shall hereafter be called the "Annual
Bonus."
(iii) Incentive, Savings and Retirement Plans.
In addition to Base Salary and Annual Bonus, the Executive shall
be entitled to participate during the Employment Period in all
incentive, savings and retirement plans, practices, supplemental
retirement plan policies and programs applicable to other key
management associates of the Company and its subsidiaries, in
each case providing benefits which are the economic equivalent to
those in effect immediately preceding the Effective Date or as
subsequently amended. Such plans, practices, policies and
programs, in the aggregate, shall provide the Executive with
compensation, benefits and reward opportunities at least as
favorable as the most favorable of such compensation, benefits
and reward opportunities provided by the Company for the
Executive under such plans, practices, policies and programs as
in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as provided at any time thereafter with respect to
other key management associates of the Company and its
subsidiaries.
(iv) Welfare Benefit Plans. During the
Employment Period, the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its
subsidiaries (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee
life, group life, accidental death and travel accident insurance
plans and programs), at least as favorable as the most favorable
of such plans, practices, policies and programs in effect at any
time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter with
respect to other key management associates of the Company and its
subsidiaries.
(v) Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and
procedures of the Company and its subsidiaries in effect at any
time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect at any
time thereafter with respect to other key management associates
of the Company and its subsidiaries.
(vi) Fringe Benefits. During the Employment
Period, the Executive shall be entitled to fringe benefits,
including use of an automobile and payment of related expenses,
in accordance with the most favorable plans, practices, programs
and policies of the Company and its subsidiaries in effect at any
time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect at any
time thereafter with respect to other key management associates
of the Company and its subsidiaries.
(vii) Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office
or offices of a size and with furnishings and other appointments,
and to secretarial and other assistance, at least equal to the
most favorable of the foregoing provided to the Executive by the
Company and its subsidiaries at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as provided at any time thereafter with respect to
other key management associates of the Company and its
subsidiaries.
(viii) Vacation. During the Employment Period,
the Executive shall be entitled to paid vacation in accordance
with the most favorable plans, policies, programs and practices
of the Company and its subsidiaries as in effect at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other key management associates of the
Company and its subsidiaries.
(ix) Effect of Increases. Any increase in
Base Salary, Annual Bonus or any other benefit or perquisite
described in the foregoing Sections (i)-(viii) shall in no way
diminish any obligation of the Company under the Agreement.
5. Termination.
(a) Death or Disability. This Agreement shall
terminate automatically upon the Executive's death. If the
Company determines in good faith that the Disability of the
Executive has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after the date
of such notice (the "Disability Effective Date"), provided that,
within such time period, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" means disability (either physical or
mental) which, at least 26 weeks after its commencement, is
determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or
the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the
Executive's employment for "Cause." For purposes of this
Agreement, termination of the Executive's employment by the
Company for Cause shall mean termination for one of the following
reasons: (i) the conviction of the Executive of a felony by a
federal or state court of competent jurisdiction; (ii) an act or
acts of dishonesty taken by the Executive and intended to result
in substantial personal enrichment of the Executive at the
expense of the Company; or (iii) the Executive's "willful"
failure to follow a direct, reasonable and lawful written order
from his supervisor, within the reasonable scope of the
Executive's duties, which failure is not cured within 30 days.
Further, for purposes of this Section (b):
(1) No act or failure to act, on the
Executive's part shall be deemed "willful" unless done, or
omitted to be done, by the Executive not in good faith and
without reasonable belief that the Executive's action or omission
was in the best interest of the Company.
(2) The Executive shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths
(3/4ths) of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the
Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct set forth in clauses (i), (ii) or
(iii) above and specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may
be terminated by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, compensation,
authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply
with any of the provisions of Section 4(b) of this Agreement,
other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to
be based at any office or location other than that described in
Section 4(a)(i)(B) hereof, except for periodic travel reasonably
required in the performance of the Executive's responsibilities;
(iv) any purported termination by the Company
of the Executive's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply
with and satisfy Section 12(c) of this Agreement.
For purposes of this Section 5(c), any good faith
determination of "Good Reason" made by the Executive shall be
conclusive. Anything in this Agreement to the contrary
notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first
anniversary of the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by
the Company for Cause or by the Executive for Good Reason shall
be communicated by Notice of Termination to the other party
hereto given in accordance with Section 14(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provisions in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
15 days after the giving of such notice). The failure by the
Executive to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason shall
not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing
his rights hereunder.
(e) Date of Termination. "Date of Termination"
means the date of receipt of the Notice of Termination by either
the Company or the Executive as the case may be or any later date
specified therein; provided, however, that if the Executive's
employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Death. If the Executive's employment is
terminated by reason of the Executive's death, this Agreement
shall terminate without further obligations to the Executive's
legal representatives under this Agreement, other than those
obligations accrued or earned and vested (if applicable) by the
Executive as of the Date of Termination, including, for this
purpose (i) the Executive's annual full Base Salary through the
Date of Termination at the rate in effect on the Date of
Termination or, if higher, at the highest annual rate in effect
at any time from the thirty-six month period preceding the
Effective Date through the Date of Termination (the "Highest Base
Salary"), (ii) the product of the Annual Bonus (defined in
Section 4(b)(ii)) paid to the Executive for the last full fiscal
year and a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination, and
the denominator of which is 365 and (iii) any compensation
previously deferred by the Executive (together with any accrued
interest thereon) and not yet paid by the Company and any accrued
vacation pay not yet paid by the Company (such amounts specified
in clauses (i), (ii) and (iii) are hereinafter referred to as
"Accrued Obligations"). All such Accrued Obligations shall be
paid to the Executive's estate or beneficiary, as applicable, in
a lump sum in cash within 30 days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the
Executive's family shall be entitled to receive benefits at least
equal to the most favorable benefits provided by the Company and
any of its subsidiaries to surviving families of other key
management associates of the Company and such subsidiaries under
such plans, programs, practices and policies relating to family
death benefits, if any, in accordance with the most favorable
plans, programs, practices and policies of the Company and its
subsidiaries in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive and/or the Executive's family, as in effect on the
date of the Executive's death with respect to other key
management associates of the Company and its subsidiaries and
their families.
(b) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, this
Agreement shall terminate without further obligations to the
Executive, other than those obligations accrued or earned and
vested (if applicable) by the Executive as of the Date of
Termination, including for this purpose, all Accrued Obligations.
All such Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled after the Disability Effective Date
to receive disability and other benefits at least equal to the
most favorable of those provided by the Company and its
subsidiaries to disabled key management associates and/or their
families in accordance with such plans, programs, practices and
policies relating to disability, if any, in accordance with the
most favorable plans, programs, practices and policies of the
Company and its subsidiaries in effect at any time during the 90-
day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other key
management associates of the Company and its subsidiaries and
their families.
(c) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause, this
Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive the
Highest Base Salary through the Date of Termination plus the
amount of any compensation previously deferred by the Executive
(together with accrued interest thereon). If the Executive
terminates employment other than for Good Reason, this Agreement
shall terminate without further obligations to the Executive,
other than those obligations accrued or earned and vested (if
applicable) by the Executive through the Date of Termination,
including for this purpose, all Accrued Obligations. All such
Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination.
(d) Good Reason; Termination Other Than for Cause
or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause,
Disability, or death or if the Executive shall terminate his
employment for Good Reason:
(i) the Company shall pay to the Executive
in a lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
A. to the extent not theretofore paid,
the Executive's Highest Base Salary through the Date of
Termination; and
B. the product of (i) the Annual Bonus
or, if higher, an amount equal to the middle target level bonus
payable, regardless of whether specified targets are met, under
the Company's incentive compensation plan applicable to the
Executive for his position on the Date of Termination (as
applicable, the "Highest Bonus") and (ii) a fraction, the
numerator of which is the number of days in the current fiscal
year through the Date of Termination and the denominator of which
is 365; and
C. the product obtained by multiplying
2.99 times the sum of (i) the Highest Base Salary and (ii) the
Highest Bonus; and
D. in the case of compensation
previously deferred by the Executive, all amounts previously
deferred (together with any accrued interest thereon) and not yet
paid by the Company, and any accrued vacation pay not yet paid by
the Company; and
(ii) for the remainder of the Employment
Period, or such longer period as any plan, program, practice or
policy may provide, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section
4(b)(iv) of this Agreement if the Executive's employment had not
been terminated, including health insurance and life insurance,
in accordance with the most favorable plans, practices, programs
or policies of the Company and its subsidiaries during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
with respect to other key management associates and their
families and for purposes of eligibility for retiree benefits
pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until the
end of the Employment Period and to have retired on the last day
of such period.
7. Non-Exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other
plans, programs, policies or practices, provided by the Company
or any of its subsidiaries and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any stock option or other
agreements with the Company or any of its subsidiaries. Amounts
which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program
of the Company or any of its subsidiaries at or subsequent to the
Date of Termination shall be payable in accordance with such
plan, policy, practice or program.
8. Full Settlement. The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of
the amounts payable to the Executive under any of the provisions
of this Agreement. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the month of any
payment pursuant to Section 9 of this Agreement), plus in each
case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of
the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise, including, by example and not by way of limitation,
acceleration by the Company of the date of vesting or payment or
rate of payment under any plan, program or arrangement of the
Company (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c),
all determinations required to be made under this Section 9,
including whether a Gross-Up Payment is required and the amount
of such Gross-Up Payment, shall be made by Deloitte & Touche LLP
(the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that
there has been a Payment which would be subject to the Excise
Tax, or such earlier time as is requested by the Company. The
initial Gross-Up Payment, if any, as determined pursuant to this
Section 9(b), shall be paid to the Executive within five days of
the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with an opinion that he
has substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the Accounting
Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments
which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company
to or for the benefit of the Executive.
(c) The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-
Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Executive knows of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date
on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect
to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith
in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis,
for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 9(c), the
Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that
if the Company directs the Executive to pay such claim and xxx
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such
advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-
Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such
advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its subsidiaries, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its
subsidiaries and which shall not be or become public knowledge
(other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall
an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. Termination of Employment Agreement. The
Executive and the Company are parties to that certain Employment
Agreement dated as of __________, 1999 (the "Employment
Agreement"). Effective as of the Effective Date of this
Agreement, the Employment Agreement shall be terminated and of no
further force and effect. In the event the Effective Date is
prior to _______ __, 2001, the term of this Agreement shall be
extended by the number of days between the Effective Date and
__________, 2001.
12. Successors.
(a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.
(c) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
13. Indemnification and Insurance. The Executive
shall be indemnified and held harmless by the Company during the
term of this Agreement and following any termination of this
Agreement for any reason whatsoever in the same manner as would
any other key management associate of the Company with respect to
acts or omissions occurring prior to (a) the termination of this
Agreement or (b) the termination of employment of the Executive.
In addition, during the term of this Agreement and for a period
of five years following the termination of this Agreement for any
reason whatsoever, the Executive shall be covered by a Company
held Directors and Officers liability insurance policy covering
acts or omissions occurring prior to (a) the termination of this
Agreement or (b) the termination of employment of the Executive.
Provided, in no event will the obligation of the Company to
indemnify the Executive or provide Directors and Officers
insurance to the Executive under this Section 13 be less than the
obligation and insurance coverage which the Company had to the
Executive immediately prior to the occurrence of a Change of
Control.
14. Miscellaneous.
(a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma,
without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications
hereunder shall be in writing and shall be given by hand delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
At his last known address evidenced
on the Company's payroll records
If to the Company: Xxxxxxx Companies, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
P. O. Xxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Executive's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a
waiver of such provision or any other provision thereof.
(f) This Agreement contains the entire
understanding of the Company and the Executive with respect to
the subject matter hereof.
(g) The Executive and the Company acknowledge
that the employment of the Executive by the Company is "at will,"
and, prior to the Effective Date, may be terminated by either the
Executive or the Company at any time. Upon a termination of the
Executive's employment or upon the Executive's ceasing to be an
officer of the Company, in each case, prior to the Effective
Date, there shall be no further rights under this Agreement.
15. No Trust. No action under this Agreement by the
Company or its Board of Directors shall be construed as creating
a trust, escrow or other secured or segregated fund, in favor of
the Executive or his beneficiary. The status of the Executive
and his beneficiary with respect to any liabilities assumed by
the Company hereunder shall be solely those of unsecured
creditors of the Company. Any asset acquired or held by the
Company in connection with liabilities assumed by it hereunder,
shall not be deemed to be held under any trust, escrow or other
secured or segregated fund for the benefit of the Executive or
his beneficiary or to be security for the performance of the
obligations of the Company, but shall be, and remain a general,
unpledged, unrestricted asset of the Company at all times subject
to the claims of general creditors of the Company.
16. No Assignability. Neither the Executive nor his
beneficiary, nor any other person shall acquire any right to or
interest in any payments payable under this Agreement, otherwise
than by actual payment in accordance with the provisions of this
Agreement, or have any power to transfer, assign, anticipate,
pledge, mortgage or otherwise encumber, alienate or transfer any
rights hereunder in advance of any of the payments to be made
pursuant to this Agreement or any portion thereof which is
expressly declared to be nonassignable and nontransferable. No
right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefit.
IN WITNESS WHEREOF, the Executive has hereunto set his
hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed
in its name on its behalf, all as of the day and year first above
written.
_______________________________
"EXECUTIVE"
XXXXXXX COMPANIES, INC., an
Oklahoma corporation
By
Xxxxx X. Xxxxxxxxx, Senior Vice
President - Human Resources
